Seniors who know they will not be re-entering the workforce are a very strong fit for stand-alone plans, especially seniors on Original Medicare with Medicare Supplement coverage, as they will not have any dental care covered by their Medicare plans.
 
Gig workers, self-employed, sole proprietors and people who work for companies that do not offer a group plan are also an attractive prospect for stand-alone dental plans.
 
From a psychographic perspective, consumers concerned about the ability to afford the entirety of an unexpected medical procedure should it emerge are also an intriguing prospect, as the growing emergence of $5,000 and $10,000 annual maximum dental plans provide high levels of catastrophic protection for clients.

How do regulatory changes impact the amount of embedded dental benefits in Medicare Advantage plans?

The most significant impact on embedded dental plans stems from the overall Medicare Advantage carrier profitability profile. When the annual Medicare Advantage reimbursement rate is set and does not leave enough dollars to cover the cost of core medical utilization and carrier profitability, we see an immediate pullback on embedded dental benefits.

This past AEP saw the starkest pullback on dental benefits in many years in the MA markets and continued MLR headwinds suggest that will continue. These have taken a number of forms in various Medicare Advantage plans, ranging from reductions in network breadth and dentist availability to lowered maximum benefits and even elimination of coverage of certain non-preventive dental services.
 
In addition, CMS established some new regulations in 2024 that will require Medicare Advantage plans to notify their customers midway through the year of any unused supplemental benefits, including dental benefits. Given how few MA members actually utilize their dental benefits, this is expected to further drive up carrier costs and will likely result in further headwinds to the level of embedded dental benefits that plans can afford to embed in their plans.

What happens to the stand-alone market when those benefits increase or decrease?

Whenever embedded benefits decrease, it adds a tailwind to the stand-alone dental market. If fewer members have high value dental benefits in their MA plans, more will seek to purchase coverage on a stand-alone basis.

What is driving CMS new regulations mandating that MA plans inform their members when they have unused dental benefits?

The GAO released a report a couple years ago decrying the fact that dental benefits and other supplemental benefits are featured so heavily in the marketing of MA plans, but yet the utilization must be very low due to the low costs associated with the coverage.

Related: Transforming voluntary benefits: A comprehensive look at emerging trends and future direction

CMS has also started requiring plans to actually report their dental utilization so they can determine if further regulations might be needed. The CMS regulations have expressed frustration with how much of a marketing focus the dental is, relative to the actual value received by the seniors in the market

What impact do you see that new regulation having on the stand alone dental market?

It seems very clear that the stand-alone dental market, especially for seniors, is going to experience some strong growth over the next few years. Forward thinking Medicare agents and advisors recognize how important this coverage is to their clients and present it as an option regularly. Many agents and brokers who have not previously offered stand-alone plans will start to take notice and include it in their offerings.

What regulatory change in the ACA market will have the biggest impact on the stand-alone dental market?

The Biden Administration released new regulations that allow states to include adult dental insurance as an essential health benefit in ACA plans starting in 2027. This will allow some states to start including embedded dental in ACA reference plans and shift some of the cost to the Federal government, for clients who receive subsidies for on-exchange coverage.

How do you see that playing out and impacting the stand alone dental market or those under 65?

It’s too early to tell if the Trump administration will be keeping those regulations in place and if so, how states will react. As reference plans for 2027 start to become available, we will have more ability to see what impact these may have. In any case, there will remain a robust addressable market for stand-alone dental coverage in the ACA markets, especially for enrollees who do not qualify for any subsidies

What impact has the Massachusetts MLR (minimum loss ratio) regulation had on the stand-alone market?

Massachusetts passed the first dental loss ratio law in the country by way of referendum, mandating that 83% of premium must be spent on care. The MLR regulations had an immediate negative impact on the market for stand-alone dental coverage. A number of major carriers in Massachusetts pulled their individual plans off the market and others increased their rates dramatically to comply with the law.

Unfortunately, the reality of individual plan administration expenses such as credit card fees and individual customer relationship management needs make this segment of the dental insurance industry the hardest hit by MLR regulations.